HARD TIMES AHEAD???

I've only paid glancing attention to the problems with the sub-prime housing loan business but it looks like we may have a serious problem soon.

U.S. credit squeeze frays world financial markets
Fri Aug 3, 2007 6:42PM EDT
By Jennifer Ablan - Analysis

NEW YORK (Reuters) - The unraveling U.S. subprime mortgage market is causing other markets to fray around the edges faster than anyone expected.

As the Federal Reserve convenes for its latest meeting on Tuesday, the corporate credit markets are grinding to a halt. About $90 billion of bonds and nearly $250 billion of loans are still awaiting buyers, several high-profile hedge funds from the U.S. East Coast to Australia have failed, and a major U.S. mortgage lender this week closed its doors.

On Tuesday this week American Home Mortgage Investment Corp (AHM.N: Quote, Profile, Research), which focused on borrowers with decent credit scores, said lenders had cut off its access to credit and that it might have to liquidate its assets. By the end of the week it had closed its doors.

FED TO THE RESCUE?

"The fallout from the U.S. subprime crisis continues to inflict damage, the ensuing rout in the marketplace has been frightening, and there is growing concern over whether the crisis will widen and threaten the entire U.S. banking system's stability," said Zhao of Bank Credit Analyst.

Corporate America has not found demand for any of its paper as bonds and loans have not been able to price, according to Greg Peters, chief U.S. credit strategist at Morgan Stanley.